NU Online News Service, Dec. 12, 2:07 p.m. EST

There has been a paradigm shift away from the state-versus-federal regulation debate in the U.S. to concerns about international regulatory proposals, according to the Property Casualty Insurers Association of America (PCI).

During a conference call on U.S. and global financial issues, PCI's Robert Gordon said chief executives from the association's membership are now focused on the "titanic battles going on" at the international regulation front.

International regulatory proposals are of "great importance to our CEOs," says Gordon, senior vice president of policy development and research for PCI. "It is a priority—a game-changing threat."

From international insurance core principles (ICPs) that establish "new rules for bread-and-butter issues" to the designation of systemically important financial institutions (SIFIs) here and abroad (known as globally systemically important financial institutions, or G-SIFIs), Gordon says the industry is following the progression closely and PCI is working on each issue in the best interests of insurers.

The National Association of Insurance Commissioners (NAIC) and the International Association of Insurance Supervisors (IAIS) is currently working on a common framework for the supervision of internationally active insurance groups (ComFrame) to develop international group supervision, and PCI supports the project as it applies to regulatory cooperation and coordination. However, there is a fear that it will "develop into another layer of international regulation," says Stephen Broadie, vice president of financial policy for PCI.

The "soup-to-nuts insurance regulation" contained within the ICPs will be monitored closely as the NAIC looks to incorporate them into the U.S. state-regulatory system. Broadie says several of the 26 standards remain open for review, including reporting of financial statements, the valuation of assets and supervisory examinations.

PCI is partnering with the NAIC to "work this out on an issue-by-issue basis," he adds.

Broadie says PCI also remains concerned with the NAIC's Own Risk and Solvency Assessment (ORSA) manual.

Broadie says the enhanced enterprise risk management requirements in ORSA are appropriate, but the confidentiality of reports filed with regulators remains critical.

"We are working with regulators on how to implement ORSA but protect confidentiality," says Broadie, who adds that PCI is also keeping a close eye on regulations to reduce collateral posted by overseas reinsurers operating in the U.S.

PCI is not opposed to reduced collateral, but Broadie says the association will remain vigilant since the NAIC is sure to face pressure from foreign reinsurers to post no collateral, as U.S. reinsurers do.

Special Reports /

PCI Outlines Approach to International Regulation Proposals

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